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ICE
May 2022

Global Environmental Markets Report

ICE Carbon Index Futures

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Highlights

  • Open interest (OI) in US RECs and SRECs reached a new all-time high of 648,032 lots on May 26.
  • OI across the U.S. Physical Environmental portfolio reached 1,166,376 lots on May 26, its highest mark in 2022.
  • The UKA futures curve was extended to include the prompt 3 monthly contracts on June 13, in addition to the prompt 3 March and December contracts.
  • The Nature-Based Solutions Carbon Credit futures (NBT) curve was extended on June 13 to include the prompt 2 months and the prompt 4 quarters in addition to the prompt 3 December contracts.

Spotlight on the purpose of Environmental Markets

Environmental products need to be aligned with climate science to be impactful. In this article and in this Inside the ICE House podcast Gordon Bennett, Managing Director ICE Utility Markets, investigates key concepts such as the carbon cycle and carbon budget, and their relevance to managing climate change.

Carbon

Global Carbon Index Futures

North America

  • 265,114 lots traded across the North American Physical Environmental portfolio, a 26% increase over April. Open interest across the portfolio reached 1,166,376 lots on May 26, its highest mark in 2022. 41,541 lots were delivered in May, with 30,719 being NEPOOL located RECs and SRECs.
  • 148,563 lots of CCA futures and options traded this month, a 25% increase over April. CCA options accounted for 16% of volume. CCA Dec22 settled the month at $32.75, 7% above the month end April settlement of $30.53.
  • 31,191 lots of RGGI futures traded this month, a 14% increase over April. RGGI Dec22 settled the month at 13.90, down 1.3% from April settlement of $14.08.

Nature-Based Carbon Credits

  • 12 different counterparties traded since launch for a total volume in May of 187,000 credits. OI 121,000 credits.
  • NBT Dec22/Dec23 spread, representing the cost-of-carry of Vintage 2016 moved between -40c and -60c on tight bid/ask and up to 100 lots per side.


Europe

  • 626,923 lots of EUA futures were traded in May, a 24% increase on April. EUA options saw 148,261 lots trade, a 39% increase on the previous month. Combined OI registered 1,010,981 lots, a 4% increase against April. EUA Dec 22 settled at €83.66 month end, nearly flat against April which closed at €84.04.
  • 25,204 lots of UKA futures traded. OI reached 34,148 lots, a 10% increase on April. The auctions on April 6 & 20 fully cleared. UKA Dec 22 settled at £82.59, up 2% on April, which closed at £80.75.

Renewables

  • 83,069 lots of REC and SREC futures traded this month, a 36% increase over April. 55k lots of this total came in PJM Tri RECs, as the V22 Jul22 contract settled the month at $25.25, near the all time high. OI in RECs and SRECs reached a new all time high of 648,032 lots on May 26, before settling the month at 621,287 following delivery.

Key Dates & Events

North America

  • Contract Expiry and Deliveries - Option Expiry June 15, Last Trade Day June 27 and Delivery Day June 30.
  • CCA Auction #31 occurred on May 18, with 58.3M current allowances selling at a record high of $30.85 and 7.9M advanced allowances selling at $28.13.
  • RGGI Auction #56 occurred on June 1, with 22.3M allowances selling at a record high of $13.90.


Europe

  • Contract Expiry and Deliveries - Option Expiry June 22, Last Trade Day June 27 and Delivery Day June 30
  • UKA auction dates are June 1, 15 and 29

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